The complex body of legislation, regulations and court decisions known as "the law" develops year by year, not in straight lines but in a moving tangle of zigzags. One role of the U.S. Supreme Court is monitoring the progress of the law on a multitude of issues and making corrections where needed to keep the law on a given issue from wandering too far afield.
That perspective helps explain the recent Supreme Court ruling in Reeves v. Sanderson Plumbing Products, Inc., which may make discrimination lawsuits more difficult for employers to win. The case concerned allegations of age discrimination, but the court's ruling is likely to be cited nationwide in all kinds of employment discrimination claims, because it sets precedent on two issues. First, the court reaffirmed the principle that it's up to the jury, not a judge, to listen to witnesses and judge their credibility. That ruling will likely make it more difficult to get cases dismissed on summary judgment or overturned on appeal. Second, the court ruled that when an employer's stated reason for terminating someone in a protected class can be shown to be false, the jury has the right to infer that the real motive was discrimination.
"Reeves will be with us for a long time," says employment attorney Paul Salvatore of Proskauer Rose LLP in New York City. "It could tilt the balance toward employees by making it harder to overturn juries." Salvatore notes that, as with any court decision, the significance of the ruling will depend on how lower courts interpret it. "But the court was sending a message that, under the facts of the Reeves case, the judge should not be taking the role of the jury."
The case involved 57-year-old Roger Reeves, who had worked 40 years for Sanderson Plumbing Products Inc., a manufacturer of toilet seats and covers in Columbus, Mississippi. He and a younger man, Joe Oswalt, supervised two production lines in an area called the Hinge Room. In summer 1995, Powe Chestnut, director of manufacturing and husband of company president Sandra Sanderson, ordered an audit of timesheets in the Hinge Room in response to reports that production was down because of absenteeism, tardiness and early departures. Both Reeves and the 45-year-old Hinge Room manager, Russell Caldwell, were subsequently fired, Chestnut later testified, because of timekeeping errors and misrepresentations by the manager and both supervisors. Reeves sued, claiming the real reason was age discrimination.
The company asked the district court to issue a summary judgment in its favor, which would dismiss the case. The court ruled that Reeves was entitled to a jury trial. At the trial, Reeves showed evidence that there really weren't any misrepresentations and timekeeping errors that he was responsible for, and that Chestnut had told him earlier that he was "too damned old" to do the job and he "must have come over on the Mayflower." The younger supervisor testified that Chestnut routinely singled out Reeves for harsh treatment. Deciding that the alleged record-keeping errors were just a pretext for terminating Reeves because of his age, the jury awarded Reeves roughly $100,000 in damages. But when the company appealed, the Fifth Circuit U.S. Court of Appeals overturned the decision. The appellate court explained that even if there was sufficient evidence to find that the company's explanation was just a pretext, that didn't prove that Reeves was fired because of his age.
Under rules of evidence established by the U.S. Supreme Court, plaintiffs in an age-discrimination case first must establish a prima facie case: that they were over 40 years old, that they were qualified for the job, that they suffered an adverse employment action such as being denied a job or being fired, and that the employer subsequently hired someone younger to fill the job. Then the employer has to provide a legitimate, nondiscriminatory reason for its decision. After that, the burden of proof shifts back to the plaintiff to show that the employer's stated reason is merely a pretext for discrimination.
In recent years, the Fourth and Fifth Circuits have reversed numerous jury verdicts in employment-discrimination cases. In addition to showing that a given employer's reason was a pretext, judges in these circuits have ruled that the plaintiff had to show direct evidence that the employer's motivation was discrimination. Other circuits have deferred to the jury in these cases. To settle the matter, the U.S. Supreme Court agreed to hear the case. On June 12, the court issued its ruling, declaring the appellate court in error and restoring the jury's verdict. "The Court of Appeals impermissibly substituted its judgment concerning the weight of the evidence for the jury's," wrote Justice Sandra Day O'Conner in her opinion. The Supreme Court ruled that, given the indirect evidence of age bias, the strong evidence that the company's stated reason wasn't true gave the jury the right to assume the real reason was discrimination.
"Reeves is important because it allows a discrimination plaintiff to prove discrimination through negative inference," says Ann Elizabeth Reesman, a practicing attorney with McGuiness, Norris and Williams LLP in Washington, DC, who submitted a friend-of-the-court brief in the case for the Equal Employment Advisory Council, an employers trade group. "If the proffered reason is false according to credible evidence, the jury is entitled to infer discrimination."
Reesman notes that this reasoning doesn't apply to cases in which the former employee disagrees with the reason for termination, or where the employer actually believed the plaintiff was guilty of an infraction that he turned out not to be guilty of. "The employer's reason can be false without being a lie," she explains. But, as the court stated, "once the employer's justification has been eliminated, discrimination may well be the most likely alternative explanation, especially since the employer is in the best position to put forth the actual reason for its decision."
Just as important is the way the ruling reaffirmed the roles of judge and jury: The judge's job is to determine the law, but it's up to the jury to weigh the evidence and decide what happened. Paul Mollica, an attorney with Meites, Mulder, Burger & Mollica in Chicago, expects fewer summary judgment motions, which ask judges to read through hefty stacks of documents to decide whether there are enough facts in question to warrant trials. Mollica predicts that close cases will go to trial, while employers facing damning evidence will settle. "Before, even people with meritorious cases were getting knocked out at summary judgment," he says. Employers who lose at trial may be less likely to appeal now that appellate courts have been told to stop second-guessing juries.
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.
One Step Ahead
So what's the message for employers? Do all you can to avoid employment lawsuits, Salvatore advises. "Have proactive, enlightened human resources policies and training for managers," he advises. "Establish meaningful complaint procedures and investigate complaints so people don't feel they have to go outside to get redress." He also advises mediation or even arbitration of employee disputes to resolve problems before employees get mad enough to sue.
When you have to terminate someone, Reesman advises, think carefully about your reasons, and be sure you can document them. "Make sure you're making the personnel decision for the right reason, and that it would stand up under cross-examination," she says. "Cross-examine your reasons before somebody else does."